Bus company Putco has proposed a scheme of arrangement that would see the company become wholly-owned by Lexshell 603 Investments and the transport company delist from the JSE Securities Exchange.
The move is aimed at increasing black ownership of Putco.
Putco said on Friday it is the clear intention of the government to transform the bus passenger transport industry of South Africa and if the company does not introduce a substantial black shareholding, it will in future not be able to derive income from its core business, being government sources.
“Putco at present lacks the necessary black economic empowerment [BEE] credentials at shareholder level. It is not yet at a level of 35,1% black equity ownership, largely because of its size and its history as a listed entity on the JSE.
“The proposals by government and more particularly the national Department of Transport would preclude Putco from tendering competitively, both on current and future business. As testimony to these assertions, Putco was recently excluded from the 2003 tender process for certain of the old Northwest Star Bus operations by the North West provincial government on the basis of the abovementioned grounds.
“Although Putco has interim agreements with the national Department of Transport, giving it certain rights in relation to future tenders and a limited right of first refusal in respect of such, it has had to resort to challenging [the department] in court on certain of these contracts. Putco is concerned about a further deterioration in its relationships with its major customer, namely [the department].
“Putco intends to both ensure its future position with [the department] and within the industry by significantly restructuring its business so that BEE partners can actively participate in the shareholding and management of Putco and its subsidiaries [the Putco Group].
“The proposed restructure is designed to establish meaningful black participation at shareholder level at an affordable price and to that end Putco has secured appropriate and highly credible BEE partners, namely Safika Holdings and DEC Investment Holding Company, to take up a significant equity interest in Putco,” Putco stated.
It added: “If the proposed scheme is not implemented (and subsequently substantial black shareholders are not introduced into Putco), Putco will not, in the future, be able to derive income from its core business, being government sources. It has therefore become critical for Putco to restructure at shareholder level to enable it to continue as a going concern in its current form.
“In terms of the scheme, a structure will be put in place which will lead to a situation where the eventual shareholding in Putco will have an element of black shareholders in excess of 50% of the total issued share capital of Putco. This attribute will classify Putco as a black company in terms of the Black Economic Empowerment Commission.” — I-Net Bridge